♪ >> it's very hard for me to see, given everything we know, a hard landing scenario buying at any soon. >> the equity market has been much more resilient to the ships in the interest rate narrative. >> we have to give market the benefit of the doubt now. >> at some point you will have to pay the piper. fed policy has only become really restricted relatively recently. >> this volatility which we are continuing to see in rates risks, i'm afraid, breaking something elsewhere. announcer: this is bloomberg surveillance with jonathan ferro, lisa abramowicz and

annmarie hordern. jonathan: let's get your week started off the back of a second week of gains out the s&p 500. live from new york city this morning commented morning. this is "bloomberg surveillance." positive by a quarter of 1%. the calendars super late this week for earnings, for data. it is super heavy for fed speak. check out the fed speak for the week. you will lose count of hanley scheduled speeches there are. the highlight of the new york fed president following a downside surprise on friday on payroll. the question, are we quickly reintroducing summer rate cuts after that jobs data? lisa: if they do, how much to the risk exacerbating some of that volatility we've seen in the markets in a way that isn't can use it to any sort of policy? at what point are they going to risk a credibility cut if they start talking about rate cuts after trying to push back so aggressively to weeks ago? jonathan: the favorite quote from citi, summer dovin'

happened so fast. you can sing that later, i'm not going to sing it now. this is a question, how big things have changed off the back of a downside surprise. if you look at the surprise index coming out of citi, it has just dropped into negative territory. you look at the performance elsewhere, starting to build a little bit. the thing we got together this morning, and we seem to u.s. exceptionalism? we see more gas around this table talk about convergence vs. divergence? lisa: i like my exceptionalism to be exceptional. he was talking about how it is really important for the u.s. to be alone for people to really buy into the story. it is very hard to understand whether the inflation is the same in the u.s. as it is in other places, whether it is really coming down as quickly in all of the places but to me, probably the week starts thursday, and thursday we get the bank of england decision. it will be interesting to see

how they parse through some of the less exceptional aspects of their economy and how they are going to respond with the rate perspective. jonathan: another classic promo for the week ahead, don't tune in until thursday. we also have to talk about the range we saw in the bond market. let's take the front-end of the curve on treasuries. behind the two-year is on tuesday, it was 5.04%. the low was on friday in the low 470's post-payroll. talking about a 30 basis point range on a two year yield. mohamed el-erian has talked about it a few times. how substantive this market seems to be to incoming information. we got to ask ourselves, do you think that is a future of that communication or a bug? lisa: i don't know if they have an answer. i think each individual fed official has a different kind of perspective at a time were ultimately, they don't know what they are going to do. they don't have a framework as mohamed el-erian has put out there.

they don't have a sense of a longer-term trajectory of baseline rates. that was an area that jay powell steered away from completely in the conference. if you don't have a sense of what the destination is, how do you understand how to calibrate the journey? jonathan: if you're confused by fed communication, there is going to be more of it through the week. i don't know if that helps or harms their cause. remember it as a thank holiday in london and japan, so trash cat -- cache treasuries haven't started yet. the moment, yields down lower by five basis points. outside of that, the euro a little firmer and crude in the high 70's here. positive by 1%. lisa: this week, a very exciting week. there is kind of an absence, as john the same come of u.s. data. -- we do get the sloughs. we also hear from john williams in california, where we will be

hearing from a lot of luminaries as well. tuesday, i just want to point out about 90% of the s&p has already reported earnings. we've really gotten a good sense of what is going on. wednesday we hear from jefferson collins and cook. we also get earnings from uber. thursday, we also get jobless claims and friday, university of michigan survey. we get a slew of on auctions and this might be the most part of the entire week. something like north of 100 billion dollars of auctions starting tomorrow with a three-year auction. jonathan: i've never seen an american so hyped up about a bank of england rate decision. have you? have you ever seen that before? >> i think it says something about a number of catalysts and information. lisa: do you disagree? >> not really. jonathan: coming up, greg is on the air with tensions rising in the middle east.

and will catch up with luigi zingales on u.s. exceptionalism. greg with this to say. over the last month, 80% of the s&p 500 by market cap have reported earnings. whilst there were some notable misses and rotation, the net read was positive with revisions higher to numbers 24 and 25. greg, hello. a proper good morning to you, sir. back in march he said the bigger risk for the market was hot data. is this good? >> we've gone from an environment where the data was too hot to be bearish on earnings but also too hot to get carried away with equities because we got this counterweight with what was going on with the fed. i think we've moved from environment where it was too hot to starting to cool down. jonathan: forgive me for getting into children's fairy tales so early in the conversation, but goldilocks was mentioned.

doesn't risk getting too cold too quickly? >> i think it is hard for it to get too hot to quickly but for now that feels like where we are. lisa: do you believe in the spreading out of exceptionalism? let's not focus on the u.s. do you think that we truly are seeing a broadening out in the story of immaculate disinflation? >> potentially in the short-term, but it can be quite tactical. we've had some policy tailwinds from china which has helped the rest of the world ex-the u.s.. the full for u.s. equities driven very much by tech and the ai story, and i think that is a secular thing that makes the u.s. standout on a structural basis. but from a more tactical view we are potentially seeing a bit more convergence. lisa: so do you find that some of the area that have led our kind of shifting, and that actually there is a big rotation

underfoot that feels sustainable to you? not just as a broadening out but away from big tech, away from u.s. cap focused, toward the rest of the world, toward consumer cyclicals? >> i don't think it is necessarily sustainable in the longer term view. this is a reversion from those part of the margate that have lagged into what could be a bit of a lull. so that is the environment where you do get the intervention. jonathan: there are one or two ways the spread can close. something can get better or something can get worse. we talk about convergence, are we talking about something improving or something getting worse? >> it feels like a bit of a catch-up trade for most part of the market has lagged, and that is not just globally. that is very much linked the story of pressure easing up a little bit from the rate side and that goldilocks narrative. jonathan: what part of it is just a tactical short-term

trade? >> you need to think about what is driving this structurally. the key driver for u.s. equities has been earnings driven by large cap tech and the ai trade, and it's not obvious to us that we are at a point or we can call time with that. lisa: you don't sound very excited about this week. >> i'm not very excited about this month or this entire summer if i'm honest. we had that glut of s&p earnings, had some pivotal moments from the fed from the macro data, payrolls, ism. there are a couple of catalysts that stand out but outside of this we think we could have a midyear role. lisa: one about bond auctions, is that where the fireworks are? >> potentially not. we are potentially in an environment where we are going to get less volatility from the bond market to the equity market rather than more. lisa: if this basically the result of people just having no conviction and having so much narrative creep and narrative shift and narrative swing that they just are exhausted? they are basically like, we are

going to sit this one out. >> low conviction and positioning. we saw a real washout over the last month that has maybe de-riske things on the downside. dpeople are a little bit worried. you go from too hot to cold, maybe it feels ok in the middle but it is something that is difficult to have conviction on. jonathan: you two deserve each other, i've never heard such a boring start to a monday morning. shall we talk about the election? when is that point in the calendar when you arrive around this table and it feels natural for us to ask that first question about pricing in the u.s. election? >> i think it's going to be after the summer. whether it is august for the months coming into the election. statistically in election years what you tend to have is a real lull in volatility for the summer and then things pick up a bit more in the coming months. it is a topic that everyone is talking about the election and when you ask people how they are positioned, generally the response is not yet. jonathan: what is your response?

>> there are several ways we can look at it. it is clear that there is a very big kink in the options curve around that election day, and the second one is thinking about rotational trades. the relative winners and losers potentially for the election trade and are there any of those trades that we like in the months running up to that as well as just for a cure election trade? lisa: right now you mentioned china as the bleed through to the rest of the world including europe. chinese president he should ping is currently visiting europe. how much do you gauge what that kind of interference is going to look like, how you sort of price in fraying connections at a time when we've heard a lot about this? >> i think the kind of deglobalization trade is one that we think is interesting to run through the election, and something that i think is,

seeing the data we've seen in the last couple weeks as simpler than market reaction from china equities, i think it is something that is interesting and it does drive some of that convergence not only globally, but within sectors. some of those have performed a little bit better but as we run into that election, tariffs, trade, deglobalization, it's going to be big things from the market. jonathan: positive by a little more than a quarter of 1% on the s&p 500. here is the bloomberg brief. annmarie: israel's military has begun moving civilians out of raw for as a possible -- rafah as a prelude to a long-expected attack on the city. many of them fled after the initial outbreak of the war. there were cease-fire talks between israel and hamas over the weekend but they appeared to have stalled. the main sticking point is hamas 'insistence that any trace be

permanent. credit suisse's ceo is set to leave obs in the coming weeks. -- ubs. he was persuaded to stay on until after the legal merger was completed. he was also the only executive to gain a board seat but during the integration cap a low profile. cocoa prices may have subsided but a new supply crunch is roiling commodity markets. it is coffee. robusta coffee climbing to the highest price in 45 years. last month prices rose 17%. it is the supply crunch that intensified for a variety of coffee use in espresso blends and instant drinks. it is blamed on poor harvest in vietnam and now a drought and heat of upcoming harvest. jonathan: we'll catch up with dani in about 30 minutes time. >> what the yen has going for it is it is ridiculously cheap on

any kind of effective exchange reevaluation. what it has going against it is the interest rate differential is still absolutely fast -- vas t. jonathan: that conversation up next. live from new york this morning, good morning.

when you own a small business every second counts. 120 seconds to add the finishing touches. 900 seconds to arrange the displays. if you're short on time for marketing constant contact's powerful tools can help. you can automate email and sms messages so customers get the right message at the right time. save time marketing with constant contact. because all it takes is 30 seconds to make someone's day. get started today at constantcontact.com. helping the small stand tall.

♪ jonathan: equity futures on the s&p 500 positive by 0.3%. if you are looking for the bond price action, this is friday's move. in fact, i don't know what move that is at all. are we open on treasuries or is

that the wrong board? i think that is the wrong board. the euro positive by 0.1%. i'm guaranteed that we've got the right price for dollar-yen, so let's do that now. the yen under pressure. >> looked again has going for it is it is ridiculously cheap on any kind of effective exchange rate valuation. what it has going against it is the effort -- interest rate differential is still absolutely vast and the cheapness of the currency hasn't turned up in awesome export data. it's turned up with a lot of tourists for cherry blossoms and things. jonathan: the latest, the yen clip soaring into losses. the currency jump as much as 1.2%. investors now shifting their focus back to japan's interest rate outlook. japan remains on holiday today, but the lingering aftertaste of the two bouts of material

intervention last week has subdued the momentum traders and trend followers. let's kick off at what is happening with dollar-yen. have we reintroduced some real risk that would benefit japanese officials? marc: i think that it has. over the weekend, treasury secretary yellen called this talk of the intervention speculation and she seemed to hint that she expected intervention to be rarer and for the u.s. to be consulted about it. so i think this was a sign to the market, or the market took it as a sign that we shouldn't expect intervention today or in the near term. the one-way market that we were seeing and the higher volatility has eased a bit. lisa: so basically we are talking about people who can reinstate some of the short positions. there is a sort of risk out there that the japanese officials have raised that is going to them out of the water. marc: i do think that the market

has to respect this level at the topside. so i do think that the japanese intervention, we won't get it confirmed until the end of this month. but i do think it was sufficient for this one-way market that was happening of intervention or of action. i don't think it is going to take a boj rate hike which the market doesn't expect until september or october. look what has happened. since the boj raised rates, the u.s. to year yield is up about 40 basis points. lisa: this raises the question about whether japan is sniffing out something that is going on in the u.s., but other areas are exceptional. and that you are going to start to see the dollar weakening on some sort of may be but direct trajectory to a different place. do you think that is a correct way of characterizing it, that we've seen peak dollar for the cycle? marc: i think so, but i'm not

100% sure yet. but i think you are right. the intervention in october of 2022, japanese uncannily picked a top 2% u.s. yield and now we've seen a batch of softer than expected u.s. economic data. not just jobs data, but service ism. this is going to be a quiet week for u.s. data. both of those look to be a little softer, so i would think of it more like this. the japanese have likely picked a u.s. interest rate. jonathan: you mentioned u.s. cpi last week. a big factor of last week was this asymmetric risk that so many people in the market were talking about, the idea that we are more sensitive to downside surprises been upside surprises. given the repricing we've seen in this bond market, how are we set up going into next week? marc: we've got to get through

this week first, of course, but with a combination of softer cpi, softer retail sales, this could put it cap on u.s. deals. what surprised me if the market came away from last week thinking that powell sounded dovish because he didn't endorse a rate hike. and now after the jobs data, the market now is pricing in two rate cuts over the course of the remainder of the year. jonathan: let's talk about the swings we are seeing at the front end of the curve. major, massive. talking about the potential for rate hikes going into it federal reserve position that didn't discuss it at all based on that news conference by friday we drop as low as 470. mohamed el-erian was on the program and we talked about it with him. we were trying to work out whether this is a feature or a bug of fed communication. which is it? marc: i don't know.

think about what happened december. the fed said it will likely cut rates three times this year. the market by the middle of january was pricing in six cuts. lisa: right now i'm focused on the idea that we are at 5% for base market rates and what that is doing for a lot of investors. over the weekend we heard from warren buffett, how he has 180 $9 billion in cash and it is fair to see $200 billion by the end of the quarter. that there really just aren't the opportunities to put it anywhere. but he earned almost $2 billion of interest on that because of where rates are. at what point is this basically an asset class in and of itself that makes cash for companies more attractive, that really does change the dynamic anymore structural way? marc: i think you are right. this is one thing i don't think the market fully appreciate. typically we think it accompanies being that borrowers of capital but instead, look at

the large s&p 500 companies. offsetting the government savings. i think companies have done well in this higher interest rate environment. we are talking about record softness, which is really surprising given the so-called input squeeze from inflation. u.s. corporate is doing very well. they are receivers of interest rates. i think that the market is still seeing the money market as a place to sort of stack capital. what i'm not sure as an asset class. i think what happened with warren buffett, he holds onto his cash and that could be a prelude to a selloff in the stock market. when the stock market sells off, this money on the sign will come back in. jonathan: hasn't warren buffett been holding too much cash for a

long time now? marc: i don't know. i was looking at a study of 70 years of stock market performance and how many stocks the u.s. market was outperformed by. i'm not so sure that this is too much cash. i know that people like myself are for the first time buying from fixed income and taking are my out of the banks which are paying is hardly any interest rate. jonathan: great to catch up, it has been too long. what it would take just at the end to unlock some of the cash in money market funds. payroll on friday, $175,000. that with the smallest gain. slowest pace of growth in nearly three years. i think a few of us were distracted by payroll, but services really disappointed. the sector unexpectedly contracting in april for the first time since 2022.

four year low, measure of input costs moving in the wrong direction. friday wasn't a great day for economic data. annmarie: i don't want to say the s-word, stag. i don't see stag and i don't see flation, so stop kidding yourselves, but there was that feeling of slowing growth which is a pretty toxic recipe. we did get data out of the euro zone that had more optimism which raises the question you've been asking since the beginning of the show. how much do we start too on the idea of the u.s. being less exceptional and how are we closing the gap? is it the rest of the world accelerating or is it more likely some combination? >> is something getting better or is something getting worse? if you look at europe, it is kind of getting better, but only incrementally. it is hard to say 170 5000 jobs to the u.s. economy in absolute terms is terrible. lisa: i'm really struggling with the data. it's very hard to come up with a

narrative which is the reason we got narrative relent. lori has been tracking just the companies and corporate earnings and what she found with the sizable gap between earnings-per-share vs. revenues. earnings-per-share has been coming in much higher than revenues. the highlight of this is cost management. this is a very different type of environment where you can see stocks perform well but it does not necessarily owed well for the rest of the economy in terms of how thrifty these companies might have to be. jonathan: more on that later. s&p futures positive by one third of 1%. coming up, we will catch up with greg valliere of agf investments on the rising tensions in thee . that conversation coming up next.

♪ ♪ ♪ and they're all coming?

those who are still with us, yes. grandpa! what's this? your wings. light 'em up! gentlemen, it's a beautiful... ...day to fly.

jonathan: good morning. getting your day started. nasdaq up by one third. if you switch and turned to the bond market, treasury should start trading in the next hour or so. yields are lower by five basis points. if you turn to foreign-exchange, a lot to talk about in the fx market. last week was a big week.

janet yellen was talking about this over the weekend. lisa: she said, i'm not going to comment, but i think that is rumored. we would expect the intervention to be rare. that is an interesting line. consultation on whether the fed is going to cut me. they probably feel like less market and economy is switching around everything that they have. it is a little rich. jonathan: the communication -- hike interest rates if you are so interested. a decent argument to say that they should. lisa: that is probably the right response. everything seems a little bit more heightened between the two.

what is janet yellen supposed to say at the end of the day? what was that line that we heard about jay powell? supposed to say at the end of the day? he did his best, but he still -- jonathan: it was a message to the market. talking about interest rate hikes. lisa: we knew if he did not say anything, they would look for something to work with. jonathan: under surveillance this morning, fed speak picking back up this week. traders looking for clues about the path forward. driving the conversation back towards rate cuts this summer. we knew it would only take one to encourage that conversation. lisa: if they talk about

potentially cutting rates this summer, i would be very curious what happens with the bond options. part of the reason why is windows the long and selloff? we still have not established what is going on with inflation and why it is as sticky as it is. they kept spending. people are trying to back their heads around it. jonathan: what is your impression of things? is it towards the dovish end of the spectrum? lisa: there is a deep fear that you do see delinquencies going up as much as they are. you had incredible games for low income workers. there is a big fear that the longer they keep the rates high, they could lose gains in that could be a problem. a different kind of policy in

its totality. it becomes a tricky dance, but i think the fed officials are working with this uncomfortable feeling of an uneven recovery. jonathan: a big trip for chinese president xi jinping. he is seeking to stabilize china's relationship with your. -- with europe. a visit from micron talking about having a different perspective on these issues. having our own perspective in europe and not just following whatever biden says. lisa: how much is pressure in the euro region that they want to get inflation under control?

it is no longer a gift of lower prices. we have seen this motley approach in europe. each has its own approach. we hear from a lot of people. jonathan: there are some lecturing firms that are probably worried about that relationship, going forward. tensions rising in the middle east. israel's military time civilians to move at of rough. the main sticking point, insisting that any truce become permanent. saying the war will be televised . it will ratchet up protest in the west. virtually begging israel to hold off on an invasion, to no avail. certainly not the military

response. i want to talk about the political consequences for biden. >> it is a very big deal. the race looks like it is about tide. if we have another horrific round of civilian casualties and protests, there is going to be a lot of protest this summer. it is not a good story for joe biden. jonathan: on one side of the screen you have campuses disrupted. on the other half of the screen, a president promising to do more to forgive student loans. >> they have already had quite a few issues. now you add this issue and i think the republicans will milk

it for all that they can. joe biden has not been able to dissuade the israelis. a hasty exit from afghanistan and and half ago. lisa: what would you recommend that they do and how they handle israel, given the fact that this is a massive clinical liability for them? >> it is a tough question. they are sending antony blinken over there to try to put some pressure on benjamin netanyahu. i think the saudi's are involved as well. i think the cabinet will make it very difficult to get any kind of a breakthrough. lisa: how much do you think is due to the conflict that we are seeing between israel and gaza? how much are people going to go

for trump versus not voting at all? >> it is a huge element. you have young people leaving the biden camp in droves. they feel he has not handled this well. it is hard to say that he will do well with the three big about current groups. young people, african-americans and hispanics. his numbers are down from the last election. lisa: there was a fiery interview the other day, talking about her book. do you think that features into the be at all? does it eliminate her from the running? does it add to the drama around the trump campaign? >> it has to the drama.

i was surprised trump said he would not have a pic until july. i thought he would start teasing it tomorrow. think she has no chance. she keeps talking about it. this is a story you probably do not want to publicize that much my wildcard all along has been j.d. vance. they will win ohio, but i think vance is articulating so good. there are several others, but i think we have a wild to go for trump takes a decision. jonathan: i watched the exchange of the weekend and i still do not understand it how difficult is this to answering an lisa: she says she cannot talk about who she has met or where she has gone. she said --

it was quite an interesting thing. she was talking and it was in a chapter called that go? jonathan: there is a chapter called dad go? do you want to jump in? >> justin old adage that always proves to be true. when you get into a whole, stop digging. she is digging and being herself into a home. jonathan: let's finish with the whole that the president is in. much has been said about the tension in the middle east, the amount of civilian deaths in gaza and what it means for the president's support. protests taking place on campuses and the risks he faces

in places like michigan. michigan is the least of his worries. he seems to be doing pretty well . what do you make of that? >> there is a big arab american population in michigan and that does not help him. i think it comes down to the economy and how people deal about the price of things. that is not a good story for joe biden. jonathan: the jobs market, going back to that figure we saw the other week. not good at all. unemployment absolutely tremendous. lisa: the lower tier of income earners had been in recession and they have been in recession for quite a while.

you can see it in terms of how much bills are going up. the fact that they can get jobs but not significantly. a lot of issues have been really difficult. jonathan: positive by one third of 1%. let's get an update on stories elsewhere. dani: howard schultz has some comments for his former company. a company that misses badly, there must be contrition, renewed focus and discipline. he said they should we focus on customer experience. shares plummeted last week after the first sales drop since 2020. he is still the fifth largest shareholder. the drama still has not ended in the seida of who gets to buy paramount. now paramount is evaluating the

offer from sony and apollo, but a deal with sony would draw a regulatory screwed. over the weekend, warren buffett said hathaway had sold its entire paramount, saying he was responsible for losing quite a bit of money. finally, you can see where my bias is. claiming victory in miami. because -- he was going -- he was able to go on and win. charles came in third. as you are bloomberg brief. jonathan: fantastic imagery over the weekend. donald trump taking in that win. apparently that is why he won. lisa: did they prevent him from

having a massive fundraiser at this event? it actually is very nice. jonathan: i just love that the former president was supporting the orange car. did you notice that? i think it speaks for itself. up next on the program, trade is reviving. >> the more jobs report as you get like this, where it is solid but clearly moving back into something that looks pre-covid, the more confident we can be that the economy is not overheating. jonathan: we will have that conversation on the others. this is bloomberg. ♪ 's -- ♪

i can't believe you corporate types are still calling each other rock stars. you're a rock star. we're all rock stars. oooo look look at my data driven insights, i'm a rock star.

great job putting finance and hr on one platform with workday. thank you! guys, can you keep it down. i'm working. you people are (guitar noises). hand over the air guitar. i've got another one. hey you, with the small business... ...whoa... you've got all kinds of bright ideas, that your customers need to know about. constant contact makes it easy. with everything from managing your social posts, and events, to email and sms marketing. constant contact delivers all the tools you need to help your business grow. get started today at constantcontact.com constant contact. helping the small stand tall.

jonathan: equities up by 0.3%. trade is reviving. >> we hit a bump for sure. is that a sign that the economy is overheating or a sign of some other thing? it is clearly moving back into something that looks pre-covid. jonathan: here is the latest this morning. fed speak picking back up. the professor expecting divergence. projecting that the ecb will cut rates first in june.

how wide is that gap? >> the short-term is big. the european economy is not me studying at the level it was before. i'm worried about the long-term. jonathan: it hints at structural problems. what are they? what stands out for you? >> i think they are a lot. they do not have development in the high-tech sector so the future does not look great. the future with china may not look as great. lisa: right now, xi jinping is

in france. how much do they need them to buy cheap goods to get out of the hold? >> i think it absolutely needs to be tethered to them. germany is the economic year -- economic engine of europe. an entire ecosystem is slow down by germany. there is a pressure to go along with china. lisa: i was looking at composite . what struck me was how much the euro was helping the regions disproportionately on an ongoing basis because people have booked vacations to europe for the

summer time. is that part of what is behind the stronger-than-expected numbers? >> certainly. especially for italy. it is a on that front. i think that they need a strong industry and a stronger service after. long-term, that is a problem. jonathan: we know tourism is important. what will be the industry of the future? america is dominating again. we are talking about europe coming up with relations. what are they going to do? >> that is a good question.

the concern for privacy is jim demint and has overshadowed the ability of european come is to compete in the ai sector. they put themselves in a corner and it is difficult to find out. at least a sign that they are becoming aware that the problem exists. lisa: how much energy today -- do you have to focus at a time that is incredibly fraught right now. how much do you think this is a problem of the university's own making? >> in my view, it is the problem of the governors. they are becoming more and more

dependent. they want to be completely independent. to some extent they are incompatible. i think students and faculty have been told this illusion. they do not want their tuition dollars to fund israel. they should explain that it is the other way around. it is actually making tuition less expensive. should you once i have a different system where you choose where to allocate your money? there is a trade-off. lisa: what do you think needs to be done, going forward, especially at a time where a number of universities have agreed to rethink some of their investments, and response to pressure from students? >> i think more transparency is

good. i think there is too much of pinkness because there is the direct investment, but there is also indirect investment. they do not disclose that. why should i know how they invest their portfolio? this decision is based on the fact that we descendants the divest for private reasons. it must be done. i do not think it should be some

students who threatened to block a. there should be a referendum, if that is what we are considering, or some form of presentation. but i think that they should let some students at least be present during this decision, without conceding that the decision should involve the students. think about columbia and the investment from them. so what is different now? jonathan: how long have you been teaching in this country? >> 32 years. jonathan: how much has the student body changed over those years?

these students wrestle with messing with ideas, they cannot tolerate someone with an opposing view of theirs. have you witnessed that change? >> students have become more demanding. there was a faculty member who said students are not customers. they are patients. it is not a joke anymore because patients can become customers. i think the quality of my students has gone up over the years. chicago it checks brighter students. we have been very lucky because we had a president that championed freedom of speech. i was always speech is saying whatever i wanted.

i consider myself very lucky. jonathan: the university of chicago has benefited from having lisa on -- lisa brown. lisa: you need -- lisa around. lisa: it is important. the whole idea of safety when it comes to intellectual thought? you should feel challenged, but i want to get off my soapbox now. jonathan: that is the second

hour of bloomberg surveillance, next. ♪ where you grew a dream into a reality. the all new godaddy airo. put your business online in minutes with the power of ai. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities

and relentlessly work with you to make them real. you're probably not easily persuaded to switch mobile providers for w your business. but what if we told you it's possible that comcast business mobile can save you up to 75% a year on your wireless bill versus the big three carriers? you can get two unlimited lines for just $30 each a month. all on the most reliable 5g mobile network—nationwide. wireless that works for you. for a limited time, ask how to save up to $830 off an eligible 5g phone when you switch to comcast business mobile. don't wait! call, click or visit an xfinity store today.

>> we think that inflation will start back again on that disinflationary trend. flexed the fed is no longer willing to provide a forecast. to give the market a clear trajectory. we are changing the expectations

for timing. >> this is bloomberg surveillance with jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: this is bloomberg surveillance. positive by one third of 1%. think about how this conversation has changed. we have the cost index coming in a little hotter than expected. a conversation going into chairman powell. following a softer than expected bed payroll report. all of a sudden, we reentered

dues the question of the summer. are they going to cut me? lisa: it depends on the data that they get. we will speak about it throughout the day ahead, but here is the question. how much can they have any credibility if they come out saying, we are going to cut me in july after pushing back aggressively? that service data was pretty negative. and it was inflationary. i do not want to call it a that rhymes with that, but -- jonathan: come up with better words, lisa. talking about narrative ping-pong and table tennis. that game is still going on, back and forth. i think they asked the right question.

how quickly can things turn from being too hot to too cold? i keep going back to what they sent on the program last friday. whether it is a feature or a bug , switching so quickly. lisa: if you take a look at volatility metrics, they have not shown the two be high. that is the reason why people looking for an edge are swinging violently from one died to the other. people buying at a time and there is fault and inflation. treasuries meant cash like never before. generating $2 billion in interest revenue in just a short period of time.

suddenly people look for excuses to buy, even if you have those on the side raising concerns. jonathan: right now, equity futures on the s&p 500. do not worry. i making it up with you at the moment. treasury yields are lower again. parts of japan as well. a little later earlier this morning, but it was pretty obvious. some follow through. lisa: and why not? the asymmetric risk comes through. taking the possibility of any rate hike off the table. summing up the earnings season. it has been really good. it has not been gangbusters.

but you have seen earnings beads more often than not. even if we have all these concerns out there percolating, you can still say, maybe we can feel comfortable. jonathan: coming up this hour, on what is pushing equities. protests continue on college campuses. why it has been a highly frustrating year in fixed income. we begin with our topsoil coming off the back of gains. writing this, he neutral at the benchmark level. pushing to be overly overall. good morning to you. what does friday change for you

and the team? >> what we have seen last week was pretty remarkable, the fed embraced higher for longer. the fed -- the markets did not blink. i would say it as a feature of this new regime and uncertainty. they are interacting in unpredictable ways. from seven till one, early last year, early last week is not a surprise that one weaker print on the payroll markets a jump to the other side. what is remarkable is that markets are holding up against grossly supportive backdrop. there is still room for reprisal

to take place. jonathan: do you need to be hyper or are a clean two different things? >> i think it means both. given the mild me singing narrative, there is room to generate by leaning against some of those extreme moves. we have seen how metaphors is like ai and aging population and health care have been generating additional return on top of what the cyclical elements would suggest, which is why we have those forces in our portfolio construction. lisa: a lot of people have been talking about how if you want to own ai, do not own microsoft and google but only some of the other industries.

which indices are you targeting to see the biggest benefit the soonest? >> we still like the big tech. they have delivered on the earnings front and are now doing buybacks. but we are branching out. if you look at the infrastructure and computing capacity, we are talking about unprecedented, historic levels. it would generate opportunities for the public market and private market. other sectors can benefit from ai. we also like health care that has very clear use cases of leveraging ai and financials. there are signs of ai broadening out.

and the earning report and in their performance. the are also seeing that it is benefiting the broader market. lisa: it is interesting. people are talking about it. there is a question about europe. i you seeing any signs that europe is catching up to the u.s.? is the u.s. weakening just enough? are you seeing a sign that we are starting to shift in terms of the narrative? >> we still like the u.s. but europe is in an interesting place. but how far they will go depends on the fed. there is a little bit of divergence.

and growth dynamics in europe is weaker than in the u.s. maybe tactically there can be some rebound because european equities offer better value compared to u.s. equities and compared to self pre-pandemic over the horizon. we still like the u.s. for the more appropriate sector composition. jonathan: you mentioned japan. we have backed down to about 153. lisa was asking the question about how close we are to a currency crisis. what is there to like about japan? how do you navigate the choppy waters in fx? >> is hard. if you look at the japan nikkei performance, it has outperformed most equities. in terms of performance, we do

see that currency intervention, it has probably been happening. that is why it is a flaw for the yen. this is really at levels last seen over 30 years ago. having said that, we are not expecting appreciation of the yen from here because real rate differentials still exist in a meaningful way between the u.s. and japan. we are not expecting the bank of japan to embark on an aggressive tightening cycle. it is just normalizing the policy. maybe -- it is really hard to be tactical around it. jonathan: the boj, the ministry of finance, how is it with those

themes? >> japan's equity performance has been mostly driven by micro-developments. we are talking about earnings continuing to deliver. we are talking about benefiting from inflation dynamics, earnings being nominal and corporate reforms. you talk about incentives put in place to encourage companies to deploy their cash more effectively. we are talking about 40% of the index looking to get off that list. macro development as the next driver, which is why we still like it. it gives -- eight gives it an auto hedging quality. yes, it is very volatile, but it

helps to offset some of the volatility. lisa: i love your idea of megatrends. there wasn't article in the new york times about not only are they buying gold, but chinese consumers are increasingly buying gold. it is leading to more speculation. are you leading into that? is there more to go as more people will -- whether it is valid or not jump on the gold bandwagon? >> gold is really hard to think about the allocation and what it should be from a construction perspective because there is no cash flow. how do you discount cash flow? it is hard, not having said that. it is correlated with real rate. that is one way to think about forecasting.

central banks across the world have been buying gold to think about diversifying their reserve. think about have recently it has been heating up and one of the few diversifying news that are working. it does make sense, especially as traditional diversifiers have not been acting as effectively as they used to. the case for gold the portfolio has become stronger. jonathan: always good to catch up. up by more than 12% of the year so far. let's get an update on stories elsewhere. dani: berkshire hathaway's cash pile has hit a record at the end

of the first quarter. warren buffett lamenting the lack of deal opportunities says it is a fair assumption that it will hit 200 at the end of the quarter. he also tried to caveat his sale of apple shares. he said that apple is one of the best companies he owns and he went on to imply that the sale was motivated by tax implications. years of delays, but now space taxi is set to launch humans into orbit. it will be key to -- boeing faces questions about the long-term vision for it space. and baseball's biggest star is not slowing down. for p4 at the plate. he powered the dodgers to sweep over the atlanta dreams. one of those homeruns traveled

164 feet. it was his first multi-homer game. it means he is tied for long balls. that is your bloomberg reef. jonathan: up next, calling for discipline on campus. >> i'm proud of a lot of the young people who want to in the war. but they have look at their lack of discipline. jonathan: good morning. ♪ ♪

how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options. yeah, and dr. xichun even takes your sketchy insurance. xi-chun, xi-chun, xi-chun! you've got more options than you know. book now. jonathan: two weeks of gains. equities adding to that this morning. yields are a little bit lower. remember all that chat?

a break at 450 this morning. under surveillance this morning, calling for discipline on campus. >> we have to understand that this is a defining moment for this generation. you cannot be shouting globalize the infantile to -- those few put -- protesters engaging in violence or anti-semitism are diminishing the thousands of young people who simply want the war to end. i'm proud of a lot of the young people who want to end the war, but they need to show discipline. jonathan: unrest continues on college campuses across the nation. public unrest will help republicans in november. a view that is shared with

publicized visits. let's talk about what is happening in the middle east and what it could mean for the president of the u.s. a lot has been said about michigan. we talked about it earlier in the program. of michigan is one of the swing states the president is doing better in compared to others. what is driving the politics at the moment an >> this is -- at the moment? >> this is a minute area. these are elite institutions across the u.s. this is not your run-of-the-mill college experience. these elite institutions are already polarized. looking at data through history, republicans, specifically

republican views of college education and unions drop off a cliff. this is where they are viewed as negative. in states like michigan where biden continues to pull out of other swing states, this is a huge educated population come substantially large, college education. it is not moving the needle the way that you would expect. 25 students is not the same as the 1960's. further, i think that the students are suffering. as they go home for the summer holiday, this will sort of dissipate. jonathan: you expect that after the summer, this will not be an issue anymore? >> i think they are working on getting a deal with saudi arabia that would require relations with israel and would require that israel wind down the war.

there are efforts happening right now that could reportedly be announced within the next couple of weeks that are designed to in this. kids are already taking their final test and are about to go home. parents are going to say, i'm paying a lot of money for you to go to these fancy schools. go to class. lisa: if i find out my daughter is in a tent when i'm paying for it to be in class, there will be trouble. over the weekend, we saw discussions breakdown between israel and hamas, and delegations leaving egypt. what gives you confidence that there are other deals in the works? >> i think that global sentiment and pressure around israel is at a level that we have never seen before since its creation. majority leader chuck schumer and the delegation in the house

is acting in a materially different way than we have seen before. pressure from the biden administration on certain types of behavior is really morphed compared to what we have seen in the past. we have a long way to go and i think popular support for this is rapidly declining. lisa: this has been very much driving the headlines. the site side story is whether speaker johnson will hold onto his role. that could be a vote this week on it. given the polarization, do you think it is feasible for democrats to bail johnson out? >> i think it is feasible. i'm impressed by the ability to say to the caucus, understand

this is unprecedented, but i want everybody to vote to table the motion. that is what you want to see in a post nancy pelosi leader. he has been able to generate wins for his caucus. that is why they are able to follow him with relative ease. i would not be surprised if she puts the deal up. and even if they did move forward with the motion to vacate, there is no replacement for johnson. i think it needs to be appreciated by everyone. as long as there is no -- we're not facing government shutdown or anything like that. jonathan: for now, they are playing nice. there is an ongoing question about the future of democracy. the president wants to make this an election issue. do you think it is one?

>> definitely is one. this election will come down to two basket. independent women who are currently undecided and people who think that both biden and trump should not be on the ticket. there is the population that makes up that basket. for most they are going for biden. the issue of the economy is always up there. i think it is sort of a useless measure. i do not know if people have ever really loved economy, generally. whether it will be elevation in crime or this idea of protecting democracy. jonathan: thank you.

breaking down the issues in washington dc. lisa: the fear is that they will stay home. are they going to vote for the third party candidate, raising this question of where do you divert more votes from? from trump or biden? jonathan: you keep hearing them talk about this issue. it may not be infamous in the polls right now, but closer to november, they will lean biden over trump. it will take a while. ♪

jonathan: the rally continues. up another 1%. the rest of the small caps are up by 0.8. attempting to make may better than april. the longest going back to march. april was pretty choppy. we can check out treasuries now. yields lower by a couple basis points. not excited about the week ahead with the exception of maybe one

thing, which is supply. you get some 30 year bonds. we have rallied hard into that issuance. lisa: i went to see the internals of these, given that recent bond sales have not gone as well. the department is moving around some things. it is the renewed enthusiasm around rate cuts really driving people to lock in those longer-term yields? i do not know the answer to that. jonathan: can we go back to the bond board? 479 50. saturday, we traded as low as 470. the low was post payrolls.

the question we have asked so far this morning is that a feature or a bug -- she said it was a feature. lisa: a complicated cross current. they are responding to that. it has not broken anything yet. there was another bank failure, republic first. it was first public and now republic first. but there is a question of, what is next? jonathan: that was a thing last year. lisa: at what point do we see some of the fissures? jonathan: there was an impression that we have moved past that, but we will see. the dollar-yen.

unreal where we on monday. all the way back as early as this morning. just another massive range today on the dollar-yen. the low was 152. all over the place. lisa: i love that you framed this within the rubric of is this a feature or a bug? what is the new level? they like uncertainty. they want to leave people guessing and they intervened. we will find the -- we will find them. you have to wonder how much they were trying to basically slap around the people trying to short then and speculate. these are very compelling movements, but i also think it is a holiday in japan. jonathan: they can thank the

u.s. for some of that. the oncoming information. to your plate, slapping things around. a story in foreign exchange. plenty of fed speak. paying close attention. renewed optimism that the fed would cut rates. israel's military moving citizens out. a long expected attack. it comes as cease-fire talks appear to have stalled. lisa: this is definitely not what benjamin netanyahu wants to see, which is why he is outright rejecting it. moments ago, she was saying, she still thinks there is a deal likely to happen. not in the same way, but

probably more as some kind of deal with saudi arabia brokered by a host of others. i would be interested to know if they are beholding to the pressure. right now it is unclear whether it is survivable because he has been challenged in a massive way , or if it is understanding what the tensions are and what the risks are. jonathan: you can see the campaign ads already. they are pretty clear. on one side, you have students shutting down campuses and on the other you have the president of the u.s. talking about forgiving loans. you can see how this works out. basically what she is saying is that this is an issue that goes away after the summer. lisa: i do not understand what is driving these protests. on universities, there has been a lot of concern among everybody

who has seen the images of people in gaza who are suffering and losing family members. there is a question of what you do with that and how you and effect -- you affect and end. we do not know how much this is going to morph off of some of those college campuses. it seems like there are a lot of people who are entrenched. reports vary depending on other nonuniversity students on campus. i do not think we have a full understanding of what was driving the protests to understand the trajectory that it will take. jonathan: and who is funding them? lisa: reporting has been percolating out. just having students go home to their parents saying, we are paying to have you in university and you are going to be in a tent, protesting and after

starting the beginning remote -- it seems a little bit misdirected. you have to wonder about the students. they have lived through a pretty extreme moment. there are different psychological questions that comes out to. jonathan: the company opening negotiations with sony and apollo. it comes after an exclusive negotiating window with sky dance expiring friday night. joining us for that stock higher more than 4%. how great he the offering? what is the opposite offer to what we have heard from sky dance? >> in terms of the financial terms, it is $26 billion all in a cash deal. it basically promises -- it

differs from the sky dance deal because it offers to treat all shareholders equally. with the sky dance deal, there was so much backlash and resistance. while sherry redstone kind of gets a preferred treatment, all the other shareholders were really going to be treated unfairly. with sony and apollo, we are seeing a 50% premium to where the stock was trading last friday. from a financial standpoint, much better. lisa: people used to be concerned about antitrust. is that a concern at all? or has there been a shift in the tide? media is another subject for them to deal with. >> it is a concern. you have two major studios that would be combining for this

transaction. sony and paramount would be about 25% of the box office and it has ripple effects across. using the number of content buyers from my 24. that is definitely something that we have to keep our eyes open for. with sony being a foreign company, there is a question of whether they would be allowed to own a broadcast network. there is a little bit of ambiguity day. lisa: fascinating. that acquisition in the world of acquisitions. we have been hearing questions. what are they going to sell? how can they raise money and

other ways? the president stepped down. are you hearing this as a predecessor to the news outlet? >> last year, there was a lot of back-and-forth. he walked it back a little bit. i think we have seen a complete change in sentiment at disney right now, but they have really got their mojo back. this is the most challenged part of their business but it is still a cash cow for disney. just because they have must-have programming, they have a lot of sports content, but we do think they will be able to hold out pretty well. jonathan: the show was

excellent. lisa: and i will eat humble pie because disney report earnings tomorrow before the bell. jonathan: you will love it. lisa: i love give both rooms and this is another version of it. jonathan: i never life game of thrones. it was to hard to get through. hardly taking any money in. how soft is it for the movie business in year ahead? >> this was a little bit of an underwhelming start to the summer. last year we had guardians of the galaxy coming out. a little bit of a self-starter, but there is a lot to come. two big things that we are looking to come inside out two that comes out a little bit later and then the big one,

deadpool comeau should be absolutely massive. a lot of good content from other studios as well. right now, as we look at the box office business, it is tracking about 20% lower versus pre-pandemic levels. definitely, this is not the big year of the rebounds. last year we had about $9 billion in box office. now we are tracking $8.2 billion. we will see all the studios come out with guns blazing. a lot of it is because of those hollywood strikes. a slightly lighter slate, but summer is going to be good, but not great. jonathan: mission impossible next year, i think. thank you. lisa: go ahead. jonathan: tomorrow, lisa mentioned disney. interview with the sea eo. the cow for that as well. lisa: fabulous.

there are some interesting movies coming down the pike. jonathan: i enjoyed it. i do not care about reviews for movies. i could not care less. lisa: there is no part of you thinking, that part of the plot did not hang together or you did not like that character? flat in terms of narrative or development? never? jonathan: i have my own opinions on things. i am not shaped by the elites. dani: israeli officials seized equipment from al jazeera after the government decided to shut its operations in the state. they denounced the move calling it a criminal act. as you know has claimed that they are -- the decision has led

to backlash in israel but they filed to move the case. set to leave ubs in the coming weeks. he had hoped to leave the business sooner but was persuaded to stay on until after the legal merger was completed. he was the only credit suisse executive to keep a low profile during the integration. howard schultz has some staying words for his former company. he took to linkedin, writing, referring to starbucks' first sales job not followed last week. he said they need to reinvent the app, overhaul the marketing strategy and focus on the customer experience. schulz is one of the biggest shareholder of starbucks. jonathan: that stock has had such a difficult time. the boycott, what is the advice there? lisa: hope that it blows over.

you have to wonder how much pressure they are putting on benjamin netanyahu. jonathan: what is the consumer problem with the cycle and what is the problem with boycotts in the middle east? lisa: you cannot control them. you can control how competitive you are, how much you charge for a latte and if lavender was the best way to go about it. these are key questions. jonathan: they are. up next, the case against data dependency. >> volatility, which we are continuing to see risks breaking something else. jonathan: you keep bringing up this lavender latte. lisa: i think i mentioned it last week. jonathan: do you want to try

one? lisa: no, not really. jonathan: this is bloomberg. ♪

jonathan: informed by the team that the latte coffee with lavender tastes like soap. lisa: we are not in the view of putting views out there that you need to listen to. jonathan: i'm not saying anybody should follow those recommendations. lisa: some people like lavender. jonathan: that is why the stock is down 16%. equity futures up by one third of 1%. yields are lower by a couple basis points. under surveillance this morning, the case against data dependency. >> there is volatility in the infrastructure. it is causing havoc.

this volatility, which we are continuing to see risks breaking something else. jonathan: treasuries surging. goldberg writing, this year has been highly frustrating for investors as they continue to overreact to every data point. treasury yields likely to grind into range. good morning. is it a feature or a bug? >> this is exactly what they get when they say data dependent. the market will over extrapolate. we will see this the next few weeks. we'll see what happens.

maybe the economy is long. a couple months ago, we were pricing in a full rate cut. it has gone down to one right before payroll. the market will keep swinging around. that is what you keep hearing from investors. jonathan: is that where you want to lurk? >> i think that is the sweet spot. i do worry that the 30 year option is going to be a little bit touchy just because of the amount of funding. i think it is very important what they said in the refunding statement. they asked us when we feel that the surveys, when do you expect

us to increase them further? it is a key point in the language. the five to 10 year point from a fundamental state point makes a lot of sense at this point. lisa: they will wait for yields to fall. you talk about the income. there is a story that i keep looking at. $2 million per minute. how much is that essentially the reason why people are buying? the reason we are going to be in a vein, not necessarily oscillating above that mark an >> roughly between two and two and a quarter. $2 million a minute.

we are actually paying on the u.s. debt. the fascinating thing to me is that the average yield on the outstanding treasuries at this point is 2.6%. that is what people are getting at the moment. the longer we stay at these levels, the more that will develop and more than treasury debt burden will increase. lisa: it raises a question about the lags. it is the reason why we have not seen the ramifications for this. i'm serious. jonathan: i know you are serious. nobody needed that. lisa: you get the sense of what banks are doing when it comes to lending. if people are still borrowing, does it indicate that this rate can be closer to the neutral rate? could this be the new reality

and we could stay here for a long time? >> yes, but i think the composition matters as well. they know when rates are high, with the people are coming through the doors come in this part of the cycle, they tend to be the ones with higher credit risk. they are very careful not to overlay at this part of the cycle, before things get fleshed out. if you continue to see strong lending, sure. maybe rates are appropriate here. it will take more time to filter through the system rather than rates are too low. i think you are seeing it, it is just not as fast as he expected it. typically, a lot of it goes through. most of it is housing and have autoliv and reddit cards.

it is acting on the last two, but mortgage is about 60% in terms of volume. the average rate is still 3.6% and it is not really going up. until that starts to filter through -- i think it does come over time, slowly. jonathan: are we talking decades or months? >> it should filter through substantially into the housing target by slowing down the levels of activity. it trickles through into all of this. the issue is that we are coming off of strong growth levels. physical is still easy. jonathan: it has felt like physically restrictive has a question mark on it. >> i do not think so.

i know that we are restrictive, the question is, how it restrictive? are we unsustainably restrictive? or are we in this neutral sweet spot where we can sustain this for a long time? that is what investors are trying to grapple with. realizing that these are high, but they do not want to go all in because they have been burned. jonathan: everyone is super nervous. there is this nervousness going from two hot to cold. he felt it friday afternoon. peter was addressing this. the question of things being too hot from to cold. lisa: lack of conviction is not comfortable. it is not a good place. there might not be that much interest in what the data, but

they have to be glued to it because that has been percolating angst this year. jonathan: you will get the cpi report next week. coming up in the next hour, legal catch up with keith. i love that. peter tchir will join us later. lisa: can i give you the statistics? 40% of homeowners do not have a mortgage. 90% of mortgages are 30 year fixed and not sensitive to the fed's rate. jonathan: is it decades or months? it is decades, apparently. things will start to happen. i'm not saying that they will not. futures positive.

from new york, this is bloomberg. ♪ at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real. you know what's brilliant? boring. think about it. boring is the unsung catalyst for bold. what straps bold to a rocket and hurtles it into space? boring does. boring makes vacations happen, early retirements possible, and startups start up. because it's smart, dependable, and steady.

all words you want from your bank. for nearly 160 years, pnc bank has been brilliantly boring so you can be happily fulfilled... which is pretty un-boring if you think about it. her uncle's unhappy.

i'm sensing an underlying issue. it's t-mobile. it started when we tried to get him under a new plan. but they they unexpectedly unraveled their “price lock” guarantee. which has made him, a bit... unruly. you called yourself the “un-carrier”. you sing about “price lock” on those commercials. “the price lock, the price lock...” so, if you could change the price, change the name! it's not a lock, i know a lock. so how can we undo the damage? we could all unsubscribe and switch to xfinity. their connection is unreal. and we could all un-experience this whole session. okay, that's uncalled for.

>> it's very hard for me to see given everything we know a hard

landing scenario playing out anytime soon. >> it's much more resilient to the shifts in the interest-rate narrative read >> -- >> narrative. >> fed policy has only become restrictive relatively recently. >> risk some afraid. >> this is bloomberg surveillance of jonathan ferro, lisa abramowicz and annmarie hordern. jonathan: the third hour of bloomberg surveillance begins right now with equity futures positive by one third of 1% and a very light calendar for the week ahead. so light that ra -- bramo is -- cpi on may 15, the last big stop for this situation following the data on friday. we need to focus on what we

heard on friday. payrolls, smallest game in six months. wages, slowest pace in three years. we've got the ism services index which is an important read on the u.s. economy contracting in april for the first time since 2022. lease of the data not great. lisa: it raises this question what is more important for the federal reserve. is it going to be employment, the strength of the economy ongoing and the hope and dreams of a soft landing or will it be inflation front and center given the fact it's come down a lot. >> some of you might like this at home as well. let's take the ism on friday. what you can hear our companies losing pricing power but worried about inflation. is it labor, that's we can start to make the argument you'll start to see layoffs and as a result you see a broader

slowdown. >> that potential outcome is sort of hinted at in earnings that are talking about the factor earnings-per-share payments came in stronger-than-expected on a more consistent basis than revenues. this is something lori pointed out over the weekend, this raises the question how are they doing that, how far will they go. in terms of cutting staff. so far this has been a story for a while and we still haven't seen it. >> they struggle to hire so much. you wait a while. getting closer and closer to that moment and based on the employment component of these pmi's we could just talk about how much weight you should put on those single month of data. how we will see that later on in the program. ultimately will that be a trend that starts to build. lisa: we are seeing more

pushback in a whole host of sectors. particularly the domestic leaning ones talking about much more cost conscience consumers. there is this feeling maybe things are slowing but this is a reason why whaley has been so good on this. what about ai and this trend that comes in and all of a sudden materials. if you work on an oil rig for a couple weeks you'll make a lot of money. all the sort of cross currents make it pretty messy. >> easy to focus, easier relatively on the secular themes and not get whipsawed by the circular day-to-day. some of these markets just last week. let's go through the supplied. here it is we start with the three year note that comes tomorrow. $50 billion worth of three years. 42 billion the day after. the day after that the 30 year issue $25 billion. more concerned of things along

the curve than he is closer forward. lisa: this is one of $25 billion worth of debt sales. i think is correct to say there's more concern from the long-term about inflation. i'm more interested in the 10-year note simply because that's the benchmark rate so many people were saying we could retest 5%. is that really feasible if you have a robust domain and from a domestic base, from an international base. this is a key question. >> down two basis points. tons of supply coming this week. coming up this hour we catch up with keith as stocks move higher post payrolls. ken lyons on his downgrade of live nation citing antitrust concerns. veronica looking to operate a fed speak. bad news is good news for stocks. stocks climbing as a weaker payrolls print gives investors hope for rate cuts. stocks should remain supported

by resilient economy. record forwards earnings estimates and positive technical trends. more upside than downside potential for equities over the next 12 months. keith, good to hear from you as always. constructive by the sounds of it. can you tell us how the data influences those views. >> great to be with you especially starting off this week. after the first quarter we had that big 10% plus gain, five months for the overall market. we see that strong momentum that tends to be a good thing but also leaves you vulnerable to a short-term setback we saw in april and we use that opportunity to increase our equity position now specifically a question round payrolls. people characterize it as week. we think it's relatively solid it's just more normalizing from a strong level. anything around 175 that's a strong number still above the pre-pandemic trend.

you had some positives as far as the inflation side cooling a little bit. wages cooling as well. that not -- one number was more goldilocks. there is an offset from the services you discussed as well but all in all that number was positive the market reacted accordingly. >> you also upgraded bond duration. can you walk us through that and how it complements the other moves. keith: when we had that pullback from about 5% and when yields were closer at the 10 year we said this is a point to deploy some of that excess cash which we know investors have. the way you think about the duration we downgraded duration back in mid-december around 390 as we approached 470 we were not trying to call the top but we also at that point the market started to invent -- invite only one rate cut prayed withing the

market moved too far. we still think the 10 year treasury is probably still in a broader range. maybe this level will be important. maybe around 5% towards the upside. i think it is more of a tactical trade. the supply is probably in a keep the lower end of the range higher previously. all in all i think that will improve as we rebounded in yields. >> how much of this upgrade to equities and duration is a tactical play simply to piggyback on the selloff. keith: that is it. the way we think about it stretch in a short-term basis, even our studies when we look at a first quarter we are up over 10% you look back historically have been about 11 times since 1950. by the end of the year you been up 10 out of 11 times. the minimum drawdown you at some point. the minimum was 4% so our message was we expect a market to move higher but it won't be a

straight path. we overlay the forward estimates which you highlighted earlier which are at an all-time high and i think with all the volatility and uncertainty of the fed the one thing overall that's been pretty steady has been forward earnings estimates each week. and if you think about since the pandemic what these corporations have faced. a once-in-a-lifetime inflation shock and what we see is companies adjusted earnings move higher. that's something we are more focused on in the day-to-day movement in interest rates. >> are you talking about u.s. companies or more broadly. >> a discussion about the globe this morning. more specific on the u.s. i think we are seeing some better trends globally but even if you look at the economic numbers which is the main driver of her earnings. the u.s. is driving the gdp upward. china is just over the last

month we've seen the first revisions in some time but europe and japan those gdp revisions move down. so we still have a more favorable view of the u.s. overall. and those companies the innovation we still think is in the u.s.. >> the reason i ask that is chinese growth isn't tremendous but chinese equities have ripped since february. so i want to understand from a performance perspective how exceptional it is in america actually is. >> it's exceptional because the biggest driver has been the tech companies and that's also where the big earnings have been as well. i think as we think about longer-term still think the u.s. innovation global companies they are selling global ai to the world and other software. the one thing that would get us more constructive on the international side would be the international earning trends move up. we are not seeing it in the same way as the u.s..

that's keeping us in the u.s. open minded to a shift maybe because china gets better, boy or not seeing it in the earning revision trends yet. >> geographically still america. on a sector basis is it still tech? keith: we are still overweight tech and communications. we are wearing down to have things like industrials. energy is still a decent hedge as well. it's not just tech this year. i still think it's hard to be negative on tech longer-term. one of the reasons tech outperforms is the earning trends outperforms the other sectors. that is still happening and that is still happening and that's the other thing we watch to say is there a shift. seeing any give on that trend as of yet. >> upgrading equities this morning. in the last month or so. downgrading cash looking to unlock some cash in money market funds as we talk about rate cuts

all over again. >> if you not to get that yield may be lock in something longer. he thinks golden commodities after their brief pullback is the place to go. i wonder how may people who thought of gold as a pet rocker coming around to seeing it as something more potentially valuable in a portfolio. >> rallies do that. >> if you believe -- yes they do. in this case there's a question about central banks, a question of chinese consumers. a lot of gold infused weddings. jonathan: gold infused weddings? lisa: there's a time when people would buy gold depending on when the indian wedding season was. jonathan: do your memory that guy who at that shirt made of gold? more than 10 years ago. i will send that to you in the commercial break. equity futures on the s&p positive by 0.4%.

your bloomberg brief with dani burger. dani: the doubters are circling prayed goldman-s david coston says election volatility hasn't been priced in. they say there still the recession late this year or early next. >> u.s. equities are extremely valued so they're likely more vulnerable to the downside. if we get this recession late 2024 early 2025 the s&p 500 is likely going to falter around 3600 that's due to our expectations on estimates and the forward pe. >> 3600 on the s&p would imply a nearly 33% decline. robusta coffee has climbed to the highest price according to the international coffee organization.

in april prices rose 17%. the supply crunch intensified a variety of coffee use. poor harvests in vietnam have affected production and a drought and heat wave threaten upcoming harvests. let's get you a check on spirit airlines in the premarket weaker by more than 3%. a wider than expected loss in the first quarter blaming bad weather and air traffic control delays. they emphasize the tough go for spirit. you'll recall a judge had blocked its merger with jetblue earlier this year. spirit said 25 aircraft will be grounded through the rest of the year about 1/8 of its fleet. that your bloomberg brief. jonathan: the latest from goldman. the chairman powell press conference said the may fomc meeting was dovish. continue to expect to rate cuts this year july and november. >> i'm really distracted by this

cool shirt. it's really amazing. a 45 euros mandate in india. he thought it would make him good with the ladies. jonathan: sort of like playing into marriages though. sort of getting ahead of getting out of the trade if you well. lisa: i saw it does not need to be ironed. jonathan: could you even if you wanted to? sidetracked on gold prayed up next on the program the corner. we catch up with ken leon and his live nation downgrade citing antitrust concerns. saw some of that in the note from goldman. more on that up next. ♪

>> coming off the back of two weeks of gains on the s&p 500. we are positive by 0.4%. let's get you some morning calls. first up city downgrading peloton encouraged by third-quarter results. once new management is announced. the second call from baird upgrading micron to outperform adding the stock to its list of semiconductor ideas. meaningful upside opportunities ahead for the chipmaker. finally cfra downgrading live nation to hold citing investor worry about overhang of the doj's review of the business practices. 10 leon saying this. unearned revenue on future concerts was 4.4 billion we are positive on live nation sponsoring 80 plus worldwide concerts and 24 for the errors tour and other big artists that benefit ticketmaster and select

venues. can joins us now. let's talk by the overhang first before the reasons to be positive. this doj overhang what you think the end result will be. >> i think there will be tweaking in terms of best practices for ticketmaster. i want to set the stage as there's 18 to 21 analysts we went to a hold prayed there still the euphoria of consumers moving from products to experiences and liberty media on 23%, all the media analysts just have fatigue with video streaming. so why not live nation. we beg to differ because the businesses are kind of different. concerts is almost like the supermarket of lost leader. over 80% of revenue but doesn't really make money. that feeds into advertising and sponsorship. ticketmaster, the tickets are only 13% of last year's revenue.

but it's the majority of the earnings so that's the area of focus and that's why we question the doj on what will they do to maybe constrain this business. jonathan: a lot of overhangs broadly. this from david of goldman. lawsuits filed by u.s. authorities against big tech companies may also be underpriced. my question would be how are you meant to price this. ken: they have a dominant position in terms of ticketing and fairness to management of live nation they put proposals even to congress to make sure scalping of tickets in some way there's more transparencies and better control of that. for consumers that's what they want whether it's aspirated where they can get a fair price for a taylor swift or major artist. so that will continue but i want to point out again for live

nation as an investment they are very concentrated to the ticketmaster business and we don't see this large exponential growth in the company which is why we have $105 target not 118 which is where the street is. >> there's a larger question about department of justice hangovers with a whole host of industries and companies. i'm thinking of the bids to buy paramount we were talking about earlier the question of is it a problem, sony with national security considering the fact it's not a u.s. company and there will be broadcast material. at what point are there certain industries immune from antitrust oversight and certain industries that are going to be that much more subject and you have to pricing very high risk premium. ken: corporate's have to be very smart about what they do on acquisitions either vertical or horizontal. in the case of apollo and sony

you also have issues related to fcc licenses but i think deals can get done. where it becomes a big problem is of course concentration and given that the world has changed in this case for entertainment with the likes of meta, google, amazon and apple coming in whether you put two studios together. i also as you know covered financials. i think that's the right deal and it's interesting paramount's former independent director who left along with three other directors because there wasn't fairness for public shareholders was the former president of sony usa. >> heading towards the election this has been something that a lot of companies have been talking about including brian moynihan the lot of corporate executives are not willing to pull the trigger on certain deals because of this concern about what could happen with the department of justice.

are you hearing or seeing that softened that there's a sense on a case-by-case basis things will start getting done in a way they haven't over the past few years. >> i think corporate will have measured risk and what's factoring now is rates are now going to zero. so the views in terms of buyers or sellers and industries is that well rates will be where they are now so when you look across the capital return on investment, citing a deal with equity and debt, those calibrations are already happening. we are optimistic for a very approved mergers and acquisitions and equity underwriting market for the rest of the sheer. -- this year. lisa: even in banks when they say unless your name has first republic ken: i would go last week to jay powell. >> particularly the largest

banks is basel three endgame. put that in english. the worry is whether the regulators would require a higher capital increase there has been pushed back not only from the banking industry but also congress and its effect on the u.s. economy. i think with the banking industry deals acquisitions will be done when the large banks are comfortable with regulation and then again when we look at the smaller banks which have less impact for investing but the really important for the u.s. economy. >> how tight our lending standards at the moment. one year ago we were meant to be going into recession following a regional bank crisis if we can even call it that now. the idea was ultimately these banks would need to pull back and the biggest data point would be the senior loan opinion officer survey because that was goodness strangle this economy. how tight our lending standards? >> it's conservative around the

table. but there is availability of credit, there's also different alternatives not only from bank loans and public credit, but also private credit from the large firms as we mentioned before. like apollo. i think at this point there is opportunity, but it is nowhere where we are in a risk on environment and they are letting borrowers have nine leverage ratios. >> wonderful to hear from you. on a range of issues. bob michele a jp morgan asset management what he say last week. basically said doesn't matter as much as it used to get the financing has come from elsewhere. you heard what he said about private markets. >> you are saying please can you make this. not going to do it. which is the reason a lot of people have had a hard time understanding this economy.

if you do have that credit impulse from private credit if you have it from other private sources of capital, how do you get a gauge on what the lending conditions actually are. >> speaks to that bifurcation in the economy. public markets more broadly right. available to everybody. >> we've seen some of the laggards do ok. they've outperformed in certain environments. it's been a tough time. jonathan: equities right now positive by 4/10 of 1%. lisa: we are trying. jonathan: veronica clark looking ahead to fed speak coming up next, this is bloomberg. ♪

you bring a lot back to civilian life. leadership skills. technical ability. and a drive to serve in new ways. syracuse university's d'aniello institute for veterans and military families has empowered more than 200,000 veterans to serve their communities and their careers. from professional certifications, to job training, to help navigating programs and services, we give veterans access to support from anywhere in the world. when i was your age, we never had anything like this.

we give veterans acceswhat? wifi?t wifi that works all over the house, even the basement. the basement. so i can finally throw that party... and invite shannon barnes. dream do come true. xfinity gives you reliable wifi with wall-to-wall coverage on all your devices, even when everyone is online. maybe we'll even get married one day. i wonder what i will be doing? probably still living here with mom and dad. fast reliable speeds right where you need them. that's wall-to-wall wifi with xfinity.

♪ jonathan: two weeks of gains on the s&p 500, that's all it takes. equities just moving forward last week, a little downside surprise on a payrolls report. we build coming out the other side. up by 0.4% on the s&p, up by one third on the nasdaq. just in terms of the mega cap tech names, there is still one to come. lisa: we get cpi and we get nvidia and that is going to kick things off in a way.

disney should be interesting. what they do with their things. jonathan: what they do with their things is the t is for disney. live on bloomberg. lisa: that was mean. jonathan: coming up tomorrow, what they do with their things. you can't even pretend to be except about anything else apart from bond supplies so let's talk about it. on the 10 year, 4.4711. tell us why it matters. lisa: it matters because we've seen some softer than expected auctions. the treasury department has been managing selling on the short end of the yield curve, basically shorter duration notes. that is going to change. i'm serious about how well these are being absorbed, how much people are diving in and whether that can be a sense of when they could increase later on. jonathan: yields down going into all of that. lisa: how did they do?

jonathan: pretty well. you don't need my endorsement. we are positive by one third of 1%. the euro a little stronger. data is getting a little bit better. i know it's not great, but it is getting better. we had a conversation about how we are going to close this gap if we are going to close this gap. will we be talking about convergence or divergence? if it is convergence, is something getting better or worse? lisa: relative to what? data in the u.s. has been surprising to the downside more frequently, whereas what we saw earlier this morning was surprising to the upside when it came to services in the composite pmi over in europe. this raises the question, have people underpriced the strength of europe and overpriced the exceptionalism in the united states? jonathan: let's talk about some things under surveillance this morning. chinese president he should ping looking to strengthen ties with europe.

he began his weeklong trip to france and elsewhere, focusing on china's trade relationship with the you as leaders -- e.u. as washington aligns with overcapacity and overproduction. this came from politico. the worst thing would be to think that we europeans must become followers on this topic and adapt to the american rhythm or a chinese host of things a year ago. but do you think that xi senses an opening to have a different kind of relationship with the europeans than the one with united states? lisa: some people have put it more bluntly. how much is a xi jinping going to exploit the fissures in the ally relationships to try to get a leg up? because he's not going to all the countries. he's not going to germany. so how much this is going to appeal to countries who more aggressively would like to see the inflation from chinese goods? jonathan: i just wonder how

americans will tolerate this position. president biden, his focused as multilateralism to make sure the allies are good allies and we remain good friends to those allies. how much will former president trump hit the campaign trail and say if you want security guarantees from us, don't expect to have an increased economic relationship with china. you can't have it both ways. sit on the fence, try to get the best of both worlds from beachside. i still wonder how sustainable that would be under a trump presidency. lisa: even before we get there, a lack of dependability on what the u.s. position is going to be has to leave a lot of countries say we have to go it alone and do what is best for us in absolute terms, not necessarily with respect to our relationship with this country or that country. we are hearing that a lot from a number of officials. jonathan: elsewhere, israel telling citizens to evacuate, a likely precursor to an attack. cease fire talks stall, hamas

insisting that any agreed-upon truce should be one of the worst missile attacks and weeks killing three israeli soldiers at a border crossing. lisa: and not just any border crossing, one of the two places where he met area eight to be transported from israel into gaza, so really severing one of the ways that people could get food and other resources in gaza. everyone wants this to end. or anyone in the western world once this to end and globally people watch this and it is horrific. the question is how do you get there at a time when israel is more and more isolated and where hamas seems to be holding onto survival is him as a preeminent concern?it becomes a very difficult thing . i don't have a sense of who has influenced. jonathan: i'm not sure anyone does. let's turn to fed speak. speaking later on today ahead of a parade of fed officials. traders looking for clues about

the path forward after a soft april payrolls print and a weak --as well. veronica, i mentioned a little bit earlier summer dovin happened so fast. we should say upfront that was not veronica. >> it was all andrew. jonathan: you don't want to take responsibility for that. let's talk about how quickly this conversation can switch to a great cuts for this summer. we heard from veronica: powell of course on wednesday and it was important was that he did not endorse this hawkish repricing over the past couple weeks. this is a fed that is still just waiting for a little bit more confidence on the inflation data. after that, very strong q1. that is something they could get the fed more dovish. jonathan: you were talking about

downside risk as well. we got that downside risk, it materialized. why do you see that as a sign of more to come? veronica: 170 5000 jobs is by no means a weak pace of job growth. i think the issue for us is that for some time, we have seen a lot of other labor market data that have been deteriorating. we saw that in the employment subcomponents. a lot of signs that point to hiring the slowing. and this is the time of year you would normally be hiring a lot of people and i think this is finally where we are starting to see the very can be strong payrolls which is almost an outlier that is starting to crack now. you sent lisa: lisa: out a note and you talk about how new york fed president john is likely to affirm powell's concerned concern about the labor market. increased focus on the

employment. why do you think he is going to lean into that at a time when a lot of people cj palace pointing to a rate cut a lot more frequently than previously? >> i think powell does speak for a lot of the center of that committee. it is important to hear that confirmed in the other speakers , but it was a very interesting shift. in march he was saying there are no cracks in the labor market data and on wednesday the first question, one of the first questions about how do we know that rates are restrictive, he answered that with look at all the signs that the labor market is coming into better balance. he pointed out that following hiring rate. so i do think this is powell that is getting worried about the employment side. lisa: how much has the balance of risks or balance of weightings changed since jay

powell spoke? in other words, how bad does the next two prints have to be, how weak does next week's cpi report have to be to reintroduce the idea of a july rate cut? veronica: the more slowing in the labor market data we see, maybe the bar gets higher for what is adding nation data for the fed. i don't think they are going to be too reactive to the database on friday. 175,000 jobs, a low unemployment rate, that is still a pretty healthy print. but as you are getting to 4% unemployment, a bit above that, that would definitely get more worrying. i think you just need a couple months where core pc inflation is running 0.25 softer than february or march, but not dramatically softer. lisa: jay powell looked -- laughed at the idea of stagflation.

do you think that there is something that runs uncomfortably with that in the services read we got friday? veronica: i do kind of agree with powell, i don't think we are in that environment now. we could see some stickiness to inflation, but something that is more stock at around 2.5-3% inflation, not a bakery acceleration. and typically would expect activity data weakening first and then you would expect that show up in softer pollution. -- inflation. i think the fed officials with think that inflation slowing is coming. jonathan: we are trying to work out whether these are the early signs of companies protecting margin by laying off workers. are we starting to see that develop? veronica: we are seeing signs that businesses are looking to do labor cuts. we had some anecdotes last week and not replacing workers if

they happen to leave. we've seen hours worked coming down, all those early signs that businesses are looking to cut labor costs, and layoffs haven't really happened yet, but that would be the last step. jonathan: would you just imagine the fed would see that as inflation comes next? it takes feature of your research and the research at home, you believe this fed can cut with inclusion closer to three than two. veronica: they will be thinking that if you start to see the weakening and the labor market, weakening demand, that should mean that wages are sloping and that should mean inflation is also slowing. jonathan: can we get the economist perspective we've had all morning? whether this is a feature or a bug, the world swings. i understand you haven't changed your base case at all, but we've seen massive swings in market pricing.

to go from seven to one to some, is that a feature or a bug of communication? veronica: certainly we haven't gotten the clearest communication from the fed. we know that they want more confidence, but what does that look like? i think it is also just a data issue. there's not a good, clear signal in the data right now and markets are very sensitive to every little data then. lisa: another argument we were having was about the long and variable lags in the mortgage market in particular, the housing market. do you find this argument that if the fed cuts rates, that will unleash a lot of sales and drive prices down? veronica: that's tricky. listings of homes have been coming up some and we have seen some softness in prices.

economic data like we seen, that is we could demand even for housing. >> question. maybe at some point it is going to have an effect. we are in that hard part now. we went from the soft landing narrative to the no lending narrative in q1 of this year, and that stickiness of inflation is where you get to the hard landing. jonathan: enjoy this as always. veronica clark breaking things down on the federal reserve with tons of that's becoming up a little bit later. lisa: does he lean into what we heard from jay powell or does he end up going his own way and saying we have to see? to me it is going to be the key threshold for how much do you end up with a new balance of what it would take to cut rates? jonathan: news breaking just moments ago with sonali basak.

sonali: we are learning now that robinhood has received a wells notice from the fcc. you are seeing robinhood shares react significantly to the news here. you are watching this notice in relation, by the way, to the cryptocurrency listings on the robinhood exchange. remember increasingly in recent years, robinhood has catered to a customer that has not only been interested in stocks, but cryptocurrencies as well. the notice was on may 4 at the preliminary determination here was to recommend enforcement action against robin and crypto alleging violations of section 15-a and 70-a of the securities exchange act. this is all according to a regulatory filing. shares fell as much as 5.5%, you see it moderating some now. we know this is all in vain of the sec looking further at

exchanges, listing different cryptocurrencies and the manner in which they do so. the traditional exchanges have also been battling the fcc when it comes to the cryptocurrency world as well. jonathan: no drama yet at least in the premarket. up next, just how exceptional is u.s. exceptionalism? >> the u.s. is going to remain exceptional. it is the only major economy and the west seriously investing tomorrow's engines of growth. jonathan: we will have that debate next. this is bloomberg.

jonathan: yields pulling back. we are down three or four basis points. let's call it 4.47. the equity market up by zero .4%. that 43 minutes from the opening bell. just how exceptional is u.s. exceptionalism? >> the u.s. is going to remain

exceptional. its growth performance may not outpace others as much as it has, that it is the only major economy and the west that is seriously investing in tomorrow's engines of growth. and because of the role of the dollar, it can run irresponsible fiscal policy for much longer than others can. jonathan: the privilege of behaving recklessly. investors taking stock of a weak april payrolls report. but the academy of securities wonders if i like my exceptionalism to be exceptional, and they also like my dated not to be dwarfed by plugged numbers. i cannot help but wonder if even on the jobs front which has been close to exceptional, we are exposed to some sort of gap in perception and we might wind up finding out that goldilocks met the wrong group of bears and the story doesn't end so well. pete, thank you for jumping in front of the camera. very excited about talking about

this topic with you. can we talk about just how exceptional things truly are and where you see this narrative gap going fromtoo hot to too cold and happening very quickly. >> youth and bearish for a little while, people look at you with this level of sympathy. if you look at it since mid-january and it has highly underperformed in europe and in china massively. china is up 25%, 30%. so this whole perception that there this exceptionalism showing for the markets i think is an old story that we are clinging onto, and then you start looking at the data. i understand chicago is not what it once was in terms of the economic hub, but we are at a level that has previously only been associated with a crisis. your previous guest, i like the economic surprise index. that has turned negative again. there's all these things going on behind the scenes and maybe we've been so fixated on inflation and the fed that we

are missing this real term, but i think that is where we could see this gap back to hard landings. jonathan: we've been very focused on the central bank divergence, the prospect of the ecb cutting interest rates in june and the reserve maybe not doing the same thing until much later this year. figure point, we've missed the fact that the economic data has turned. at surprise index is now negative, at the price action performance has been elsewhere. so the question to you, does it continue? do you see more people getting on board and how would you play this thing out? what would you do? >> for me, i like rates right now. i thought would be in a 10 year range. i think we might pull back the 425 if economic data continues. to be honest, i think there's already been enough weak economic data that we've ignored. that is going to be the first way to play it. then the question, how do equities respond?

bonds do well at stocks throughout. i think that could fade rather quickly as people start saying hey, this has only been a subset of the economy that has been exceptional and there has been a subset that has been exceptional. if the rest of the economy starts fading, these cannot do that well. in the near term i kind of like banks, some of those other sectors to benefit from this goldilocks thing. but i'm worried we are not going to see a smooth transition from known landing to soft landing to hard landing. the data already supports some of that year. lisa: there's a question about whether this is a tactical trade or a tactical view or something strategic over the long-term or you start to see a greater chance of some sort of downturn that could more fundamentally challenge certain equity valuations. is it just tactical or is it something that has longer legs? >> for me i think this is more fundamental. i viewed china as china trying

to sell their own brands and compete more directly with us. what i don't like his china will work domestically first and then sell in the emerging markets, which they are doing. but i always the euro as a potential weak link. we have the ability to confront china, to draw lines in the sand and rams are super six vessel. europe always strikes me as a little bit more dependent on china than we are. xi is over there meeting with the french leader. i think you could see more go to that and unlike in the past 20 years where china does well, i think we are going to get less and less of a slice of that and more import competition. i think this is strategic low valuations, not just a technical trade. lisa: you've had this brilliant idea that we discussed at length. why do you think now with the time that markets are going to come to it, given the fact that earnings have been coming in pretty well?

we've seen in retained earnings power even if it is not pricing power and there are a lot of things including the jobs report that weren't exactly terrible. >> on the jobs report i think we mentioned in the first part, the birth-debt model where they are trying to estimate how much jobs are created and new businesses, maybe it is valid. my question, that is kind of the last outlier, and then in terms of why people notice this china story much more, you are starting to see reaction, parts of europe reacting, and for the first time his chain stocks i doing better, i think people will be watching very closely for a few names to see other sales of the china go. and if there sales disappoint, this whole view that we are weak because china is weak

disappears. that is where we really confront these multiple issues. jonathan: we will save that for another day. i want to talk geopolitics with you. biden, netanyahu to speak about rafah later on today. if we get the same thing here at bloomberg we will be sure to share it. your view, the conversations with the generals you have at the academy, what does it look like? >> i think we are still dubious that we will get any form of cease-fire until israel is done eliminating hamas as much as they can. they are likely to go into rafah. when you look at the data, as awful as it is, they've been very conservative, they taken some losses. it's a very tricky situation. it seems unlikely. and there is concern.

we see israel really want to progress into rafah to eliminate more of hamas as a threat. jonathan: we are not in the 90's, we are not in the 80's. we are in the 70's. if they still the upside rest on the back of this? >> we were saying we were less bullish, we are now getting back to fully bullish. headed for the election i would not be surprised to see spots of activity being around russia and ukraine. other things that push crude prices higher. one theory would certainly be that if putin wants trump to be elected, higher crude prices and sorting very well so i would watch out on that front back at these levels i think you kind of the crude as a hedge. we do have to manacle growing for data centers, they are going to need energy. that energy is going to be powered by something. i put energy high on my list of

things i like to own. jonathan: this was awesome, good to hear from you. focus on the middle east as well. the united states and the disruptions caused by protest on college campuses. columbia canceling university- wide commencement ceremony just moments ago. lisa: a came after a lot of pressure due to some of the encampments on the campus, a question about how much they can ensure peace and a sense of a lack of disruption to have the ceremony celebrating graduates, talking about whether this fizzles over the summer is a big question. let's see. jonathan: let's see. coming up tomorrow, the conversation continues. we will catch up with the disney ceo hugh johnston. steve eisman, looking forward to that. mark zandi of moody's as well. live from new york city this morning, good morning. this was "bloomberg surveillance." ♪

>> good morning. we are back with two rate cuts. equities continue higher. apple slightly better off as warren buffett trims his position but we will cut you down to the market open. it kicks in in just under 30 minutes time. coming up, futures moving higher after two consecutive weeks of gains. and